Deal focus: Trax offers brands a valuable close-up

Global consumer brands spend more than $70 billion a year on shelf space and related promotions intended to make sure their products are the first ones shoppers reach for in the supermarket, according to Joel Bar-El, CEO of Trax Image Recognition. However, until relatively recently it was hard for them to quantify the impact of shelf positioning on sales.

“They had two sources of information: supply chain and cash register data, or what went into the store and what went out. There was no mechanism to understand the drivers behind a particular product’s performance,” Bar-El explains.

Trax, which recently received a $19.5 million round of funding from Investec Bank at a valuation of nearly $250 million, offers a solution to this dilemma. Sales reps use smart phones to photograph a store shelf and then Trax’s cloud-based image recognition and computer vision algorithms identify products – and how they are presented – and turn data into actionable information. For example, would Coca-Cola sell a particular product in a particular store if it were moved three shelves over?

Trax is Singapore-headquartered part by chance and part by design. Having recently sold his previous start-up, Bar-El met the two people who would become his co-founders in the city in 2010. They came from retail and recognized the value of a solution that could deliver information regarding on-shelf performance. His technology experience meant this idea could be put into practice.

Each founder contributed about $100,000 in seed capital, and within two months of establishing the company, a further $500,000 was raised at a valuation of $1.5 million. They opted to remain domiciled in Singapore because the tax policies are favorable and the profile-conscious global brands Trax serves wanted a service provider in an onshore jurisdiction.

Only one of the company’s investors is actually from Singapore, although it accounts for a sizeable portion of the $97.5 million raised to date. Hedge fund Broad Peak contributed $15 million in 2014 and then committed $50 million last year at a valuation of about $220 million.

Trax got its break early on by establishing a partnership with Procter & Gamble, which used the technology with its brands, prompting others to do the same. It also helped that there was little or no competition and the return on investment for brands piloting the technology was immediately apparent. Trax now works with around 35 brands on over 100 projects in 45 different markets globally.

The company is looking at ways to bring the image recognition engine from the cloud and into the device itself. It is estimated that within two years standard smart phones will be powerful enough to support the infrastructure internally, and once that happens Trax can go directly to the consumer.

“Consumers will be able to view online all the digital aspects of the brick-and-mortar stores they are walking through,” says Bar-El. “It will be the equivalent of Google Maps for retailers.”

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• Topics
• Southeast Asia
• Technology
• Expansion
• Media
• Singapore
• Growth capital